As Kospi tops 5,000, ruling bloc pushes corporate law overhaul to anchor rally
The presidential office and ruling party moved to fast-track revisions to the Commercial Act to reinforce the stock market rally through institutional reforms, as Korea's benchmark stock index topped 5,000 points for the first time.
The consensus came during a luncheon meeting President Lee Jae Myung held at Cheong Wa Dae on Thursday with the Democratic Party of Korea's Special Committee on Kospi 5,000 — a gathering that coincided with the index's milestone.
The following day, Lee reiterated the importance of the "Kospi 5,000 era," saying that "if Korea's companies are properly valued, the first thing that happens is that the wealth of all our people increases," in a town hall meeting with residents in Ulsan.
Rep. Bak Seung-a, the Democratic Party's floor spokesperson, said Friday that the party has consistently pushed ahead with improvements to capital market systems, including revisions to the Commercial Act, in an effort to resolve the "Korea discount."
"The recent crossing of the Kospi 5,000 mark is a clear signal that this direction was the right one," Bak said in a statement. "However, this is not where we can stop. To create a market environment that ensures mid- to long-term stability and growth, additional legislation and institutional reforms are needed."
Bak said Thursday's meeting also covered "ways to push forward to usher in a Kosdaq 3,000 era by using new financial infrastructure such as digital assets and tokenized securities."
The secondary tech-heavy Kosdaq bourse has recently been nearing 1,000 points.
"The party and the government reached a shared understanding on the need for institutional reforms to strengthen the capital market's basic fundamentals, including a third revision to the Commercial Act, measures to prevent stock-price suppression and steps to address the problem of multiple listings," Bak added.
Rep. Oh Gi-hyoung, who chairs the committee, said in a radio interview with KBS on Friday that the meeting's broader aim was to "push ahead with corporate governance reform in the capital markets and, through that, to better revitalize the market overall."
At the center of the efforts is a revision to the Commercial Act, the third such amendment following the first and second bills that passed the National Assembly in July and August 2025 to strengthen directors' fiduciary duties and shareholder rights, respectively.
The proposed third amendment focuses on treasury shares, reflecting criticism that the practice of acquiring shares without canceling runs counter to international norms.
Under the plan, companies would be required, in principle, to retire treasury shares after buybacks. If a company chooses not to cancel them, it would have to seek approval from shareholders at a general meeting, effectively allowing shareholders to decide whether the shares should be retired or retained.
"What matters is giving the market confidence that we are consistently fixing a tilted playing field," Oh said Friday in a separate interview with MBC. "If that trust takes hold, the market's latent energy can be unleashed — driving growth and a return to normal valuations. That's why we set out a target of lifting the price-to-book ratio from around 0.9 to 1.8 or even 2.2."
Oh said Lee and Democratic Party lawmakers "shared the view to push forward with the third revision as quickly as possible" during the luncheon. The Democratic Party introduced the third revision to the Commercial Act in November 2025, but it has yet to make meaningful legislative progress.
"I think we are in a position where we can be criticized over this," Oh said. "Last December there was a filibuster, and various political issues got in the way, which I think pushed it down the list of priorities."
Asked whether the main opposition People Power Party opposes the third revision to the Commercial Act, Oh answered that the party "had initially opposed it and had not actively engaged" with the legislation.
The People Power Party on Friday dismissed the ruling party's claim that the Kospi 5,000 milestone was the result of revisions to the Commercial Act.
The main opposition party instead proposed to the Democratic Party that implementation of the Yellow Envelope Act, scheduled to take effect on March 10, be postponed by one year.
The bill is designed to guarantee subcontracted workers' right to bargain with principal contractors and to limit excessive corporate claims for damages arising from strikes, thereby providing substantive protection for labor rights.
Rep. Jeong Jeom-sik, chair of the People Power Party's policy committee, said that "many economic experts point to the Yellow Envelope Act as one of the biggest risks to the stable settlement of the Kospi at 5,000."
"There are concerns that if the Yellow Envelope Act is implemented, uncertainty in labor-management relations will increase, leading to a contraction in corporate investment and a decline in stock prices." Jeong added.
"The real engine behind the stock market's rise was not the government, but the efforts of Korean companies that, even in difficult conditions, have staked their survival on strengthening competitiveness."
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